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The term "bank" is derived from the Italian word banco. Banco means desk or bench. Florentine bankers during the Renaissance used this word because they performed their business above a cloth covered desk. Banks, however, can be traced back even further than this. Moneylenders in ancient Rome set up stalls in enclosed courtyards on a long bench (or bancu). This is where the words banco originated.
The first modern bank was founded in 1406 in Italy. It was known as Banco di San Giorgio (Bank of St. George). Over time, banks have evolved into the financial institutions we know today that offer many different financial services. - Banks' primary function is the conducting of checking and savings accounts for customers. They pay checks drawn from the customers' accounts and collect checks deposited into accounts. Banks also have a larger commercial role and include services such as the issuance of banknotes, processing telegraphic transfer payments, Internet banking, issuing bank checks and drafts, lending money, safekeeping documents, exchanging currency, and selling insurance.
- Banks typically feature several different channels for customers to access services. These channels include branches or physical locations, automated teller machines (ATM), telephone banking, and online banking where customers can complete transactions over the Internet.
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There are several different types of banks in existence today. The two most common are retail and commercial. Retail banks work with consumers and provide basic banking services such as checking accounts, savings accounts, safety deposit boxes, and mortgages to people and businesses. Commercial banks work with small and large businesses, offering services such as lending money, savings accounts, checking accounts, lines of credit, and payment processing.
Investment banks exist to provide assistance with investment markets. These banks do not generally take customer deposits. Some larger investment banks may also serve as retail or consumer banks. Central banks also do not typically work directly with customers. They manage banking activity, conduct monetary policy and regulate other financial firms.
Credit unions are non-profit organizations owned by its members. They perform most of the functions of a retail bank but focus on service over profit. Savings and Loans are another type of bank that was created specifically to offer affordable mortgages to its customers. They typically have higher interest rates, but they are able to offer lower monthly payments over a longer period of time.
Online banks are a relatively new type of bank. They are accessed primarily on the internet, usually with no physical location for the consumer to use. They offer most of the same services as retail banks and can offer more competitive rates. - Banks offer many benefits to consumers and businesses. For individuals, the ability to store money safely, pay bills instantly and avoid fees associated with check cashing are major benefits. For businesses, banks offer accounting services, payroll processing and record keeping that is essential for maintaining a profitable business.
